Rates pol­icy leaves hole

Over half a mil­lion dol­lars will have to be found for the City of Kar­ratha’s 2015-16 bud­get fol­low­ing the State Gov­ern­ment’s di­rec­tion for the City to re­duce rates on FIFO camps.

The de­ci­sion to take the rev­enue hit came af­ter weeks of fruit­less ne­go­ti­a­tions with the min­is­ter and Depart­ment of Lo­cal Gov­ern­ment as the depart­ment tried in vain to find a ra­tio­nal ex­cuse to re­duce FIFO rates but not gen­eral com­mu­nity rates.

From the var­i­ous dis­cus­sions it be­came clear that the depart­ment does not have a good un­der­stand­ing of how FIFO works be­cause they made nu­mer­ous in­cor­rect as­ser­tions about what im­pact FIFO has on the lo­cal com­mu­nity and how the City was plan­ning to col­lect rate rev­enue from these fa­cil­i­ties.

While the depart­ment had ap­proved the iden­ti­cal coun­cil rates method­ol­ogy for the pre­vi­ous three years, in 2015-16 it is re­quir­ing or­di­nary mums and dads to pay pro­por­tion­ally more and FIFO camps less.

Un­der our pro­posed model, a FIFO bed would pay ap­prox­i­mately half the rates of a bed­sit, or a third of a one-bed­room apart­ment — we do not think this is an un­rea­son­able amount.

While we nor­mally have our bud­get fi­nalised be­fore the end of the fi­nan­cial year, the Val­uer Gen­eral this year did not fin­ish his task un­til late July.

This, cou­pled with the highly vari­able and some­what ques­tion­able na­ture of the val­u­a­tions, has placed us slightly be­hind where we like to be in terms of bud­get adop­tion.

We will be con­tin­u­ing dis­cus­sions with the Val­uer Gen­eral be­cause we be­lieve that some of the val­u­a­tions are not ac­cu­rate.

For ex­am­ple, one par­tic­u­lar 1500-bed FIFO camp has been pre­scribed a gross rental value of $20.

To clear the way for this year’s bud­get to be passed and to re­duce the City’s in­ter­est loss, coun­cil fi­nally ac­qui­esced to the min­is­ter’s de­mands for lower camp rates.

This was af­ter we had vol­un­tar­ily re­duced the rate yield from 21 per cent in 2014-15 to 19.3 per cent pro­posed for 2015-16.

The ap­proved FIFO amount is now 18 per­cent of the to­tal rates. We do not in­tend to in­crease rates to our other ratepay­ers so will be search­ing for sav­ings through a de­crease in new cap­i­tal projects, re­duced ser­vices and salaries, plus with­drawal from our re­serves.

While this un­war­ranted State Gov­ern­ment ad­just­ment to the coun­cil’s 2015-16 rates does have an im­pact on its fi­nances, the City re­mains in a strong fi­nan­cial po­si­tion.